Involvement of customers in the innovation process .1 Dialogue with the customer

The qualitative study of Flint et al. (2005) indicates that LSPs regularly interact with their customers to identify unmet needs and difficulties offering opportunities to improve their services. An important foundation for this dialogue with the customer is the establishment of a customer-oriented and innovative culture. A frequently used approach to gather clues for innovation is the establishment of customer groups: “Key members of strategically important customer organizations were invited to come together at one time in one place to discuss issues with the logistics service provider.” Furthermore, Flint et al. (2005)

describe special approaches of LSPs to intensify this process, as for example formal depth interview processes or extended, single customer retreats.

In the same vein, all interviewed companies from our study regularly seek conversations with their customers. These meetings usually address issues related to improvements of existing business relations. Both customers as well as LSPs initiate such meetings. From the customer side, contact is searched if expectations or agreements are not fulfilled. In company C, for example, continuous improvement processes are part of the contracts with some major customers. If the LSP is lacking behind concerning productivity and cost reductions, these issues will be addressed by the customer.

The LSPs also actively invite their customers to special meetings – usually each customer separately. Strategic meetings are held regularly with large and important customers. Traditionally, these interactions with the customer are used to improve existing customer relationships and for acquisition of new business.

However, some interviewees report that they explicitly address topics like improvement processes and future innovations (A, B) with their customers.

Interactions based on virtual communities and social networks in the web are not considered a suitable instrument for customer interaction by the interviewees.

An approach to intensify the dialogue with their customers already practiced by companies A, B, C, E and F is to send own employees to the customer company in order to study their processes. However, the LSP first needs specific reasons to enter the customer company. These could be for example:

• Remedy of urgent problems the customer is facing: Employees of the LSP pass through the defective processes and test the involved interfaces in order to detect the causes and to develop new solutions.

• Improvement of existing processes: Joint workshops are held at the customer site to advance and optimize processes involving the operational level.

Employees suitable for this task usually stem from customer management or sales force and possess logistics planning competences. Aim of these visits should be an intensive process analysis and optimization on the operational level

as an enabler for new innovative projects. Interviewee from company E, for example, reported that in his competence area they have a special process-team consisting of four business analysts specialized for analyzing customer processes.

Altogether the interviews show that LSPs are involved in an intense dialogue with their customers. Diverse opportunities exist to discuss innovative topics. This should be more actively used by the LSPs to develop new innovative services.

Existing information channels used for daily business need to be further evolved to enhance innovations.

4.2.2 Innovation cooperation with the customer

Wagner and Sutter (2012) provide evidence based on four case studies that innovation projects between third-party logistics providers and customers can be very beneficial for both parties involved. All four of their analyzed projects were initiated by customers. However, customers as well as LSPs invested resources in the projects. These resources were mostly complementary to each other and could not have been compensated if the other party was not involved. Direct interactions between the employees of the involved firms as well as testing opportunities provided by both sides paved the way to successful innovation. As a result of the projects, the LSPs could strengthen their innovation capabilities and intensify the relationship to their customers.

Three of the companies that we interviewed already have experience concerning innovation cooperation with their customers (A, B and C). In order to initiate such cooperation a primary willingness of the customer to work jointly and fair with the LSP needs to exist. This encompasses openness towards the development of really new solutions instead of incremental improvements of already existing solutions as well as a willingness to transparently and openly share essential information. Knowledge of the customer’s value chain is a prerequisite to most joint development projects.

The customer needs to draw a benefit from the innovation cooperation to achieve a win-win situation. This is likely if the LSP has higher logistics competences than

the customer. Customers with strong own logistics competences are more likely to develop innovations on their own. Sometimes these customers give special defined work packages to external LSPs. In this case, however, the LSP is rather regarded as implementing entity and not as equal cooperation partner.

Furthermore, the willingness and ability of a customer to participate in an innovation project depends on its own innovation culture. If innovations are rated high in the customer company then the willingness to also advance logistics innovations increases. Some customers also seek innovation cooperation if properties of their goods are not conforming to standard logistics solutions. For example, if a company wants to ship a good that is too heavy or too valuable for normal transport solutions, it is likely that this company is willing to innovate together with his LSP.

So far, the interviewees did not actively seek lead users among their customers.

However, some of the interviewees could report about innovation projects with leading customers of one branch that could be transferred to other customers of the same branch afterwards. Furthermore, some industries are more advanced concerning their logistics solutions than others, as for example the automotive and high-tech industry. Solutions developed here, often can be introduced to other industries later on.

Interviewees from companies D, E and F could not report own experience with customer innovation cooperation projects. However, only the interviewee from the small LSP (D) states that his company is lacking resources and competences to approach customers for innovation projects. Interviewee from company E states that in his competence area of the large international LSP they are aspiring joint innovation projects with their customers, but they are still at the beginning of such approaches. As they are a large international leading LSP, customers attractive for such cooperation projects would need to have a similar size and position in their respective industry. Likewise, interviewee from company F thinks there is a realistic possibility to start innovation projects with industry customers that possess an own innovation department.

4.3 Involvement of other external parties in the